Why You're Probably Charging Like a Wimp (And How to Fix It)

Joe Blackburn  0:00  
You know, some people race to the bottom in pricing. I would say, don't start out and price high, and let the market give you a feed, a feedback on what they believe your value is. And then when you have, you know, a sustainable business, or you're getting a lot of whatever that product is at that price, you test it again.

Jason Croft  0:18  
Welcome to the lion's edge, where top performers sharpen their teeth, hosted by Joe Blackburn, founder of The Lion, who is relentlessly dedicated to helping business owners lead multi million dollar teams and me. Jason Croft, I transform unseen entrepreneurs into industry leaders by developing their market gravity. Each week, we reveal proven strategies and raw insights to help you maximize your business, multiply your wealth and make your family indestructible. Now let's create your edge. I mean, if

Joe Blackburn  0:55  
you can control your pricing, you have 100% control over your pricing. Now there may be an embedded cost and the cost of good or whatever. But if you control the price, you control it. The market determines it. And what I see is people inherently try to price low because they think no one's willing to pay whatever price seems uncomfortable,

Jason Croft  1:18  
yeah, even before they've tested or even before they've done anything else. Yeah, right,

Joe Blackburn  1:23  
they a they probably haven't looked and see what the competitors are charging. You know, I've, I've in this day and age, I don't see a lot, and maybe in huge corporations, yes, they mystery shop and do all those things. But in businesses, I don't see a lot of trying to find out what the you know, what my competitor charges or prices at or whatever. But more importantly, when you're pricing something, the best way to get the right price or the, you know, the price that will work the most is to price high and let the market give you the feedback, and then you might be able to talk about value. You You know, I heard an interesting and I work with people that have trades. I mean, we're doing some different things around pricing. And I heard this one the other day. And now the these guys are, you know, there's two of them that are in the sales team are trying it, and it was on estimates, and it's like, well, where in the other estimate are they lower or cheaper? Because the client is the client's gonna be like, I have no idea. I just went off price. So if they're, I mean, it, is it the materials? Because if they're dramatically different than mine, there may, are you getting quality? Is it the labor? What's the you know? So

Jason Croft  2:35  
you mean, in a sales conversation, they're, they're asking that prospect, hey, comparing their estimate that they've gotten from somewhere else. Well,

Joe Blackburn  2:44  
like, I'm told, you know, I'm going with someone who's less or cheaper. Well, where in the estimate is it cheaper? Because the consumer doesn't, you know. Like, we always get in our world, and we we look at something and understand it, right? Like, oh, that's my estimate. I understand all this stuff, and I know what it means, and I know how expensive that is, and what labor actually costs, and all those things like the person on the other side does not. They're probably going to the what is this costing? And then saying, I it's too much, too little. I can't afford. Whatever they rationalize. And just ask him, well, where in there are are they cheaper, or are they less because, if I'm lining them up and it's on material, specifically, how long is that going to last? Why is it so much cheap? I mean, I have to tell them, why? Why would that be so much cheaper? We buy from the same vendors. We have the, you know, we actually, and this company, by the way, they get better pricing because they're bigger than everyone. So it, you know, some people race to the bottom in pricing and believe that's the way to go. I would say, don't start out and price high, and let the market give you a feed, a feedback on what they believe your value is. And then when you have, you know, a sustainable business, or you're getting a lot of whatever that product is at that price. You test it again. So I think people on profitability, they go in with a mindset, the cheapest wins. Sometimes it does. I mean, if it's, you know, a widget, and it's this widget versus this widget, and that's what it is, yeah, you're the cheaper one. Welcome to Amazon, right? You know, now, there is another component to that. Some people buy Gucci when they could just go to Target and buy a bag, right? So depending on the product, there could be a status tied to it,

Jason Croft  4:37  
right? It's which game are you in? Which game are you playing if it's

Joe Blackburn  4:41  
service based? That's different. If I'm providing a service well, a I don't want to be the lowest priced, because what would that tell you? My confidence is the lowest whoever lowest price person has the lowest amount of confidence, or they're trying to do it in mass, and they're doing it for them, not you like if you buy. Right? Let's just say you bought a service in math, like, have you guys ever heard of these online courses? You ever heard of those, or communities, something like that? Maybe so, maybe so. It's like 1000 bucks for $99 why? Why are they so cheap? If they work, why are they so cheap?

Jason Croft  5:19  
Yeah, and that's that is what runs through yet. Is it because they're trying to get a million people in? Or do they not believe that they can actually do it? Yeah,

Joe Blackburn  5:28  
it's, it's one or the it's two ends of the spectrum, beginner or been doing it so long. Brand carries it this one over here. They make a lot of money, but they also, you know, they also did 2030, years of work to get to over here. But if I start here at low price, it's low price, low value now depends. So this gets into a puzzle. Well, maybe that market can only that they're appealing to. Can only afford that so on pricing, regardless price where it's a little uncomfortable for you, because you can always go to the old, how far apart are we? What is you know, you can get into a sales conversation if you want to go down that road and start to figure it out. And you probably should figure out why people don't believe it. But the most of people on the line are dealing with that side of the spectrum. They've been around, they're doing business. I still think people just inherently think I'm that's too much, and I don't. I would never go with your intuition on too much. I would go with what the market tells you, if you were one, if you're really wanting to be profitable. Let the market tell you, the people that you actually have in your pipeline say that, versus you thinking it, because here's what's happening is, and this has happened to me, lo and behold, I Are we on? Like, mistake number two, I've only made two if someone just immediately says yes and says nothing about the pricing. What message did I just receive? If they're like, yeah, here invoice me. Yeah, what's the message? I just got too low. Yeah, they think they're getting a bargain, and they might be. But in, if you're in, this is, you know, there's different sides of the business. Client Results are number one, marketing and profitability and all those other facets of business. But to me, running, if I'm operating the business, this is talking about the business, not the client. That's a feedback that, well, I didn't get any. They didn't say anything. So I don't know if they think it's fair, if they think it's low, if they don't care, or they have so much money, they just write. So I have to do some work to figure out where my pricing points are, and if you're so, if you're running something that has lots of offerings, maybe you don't have the time and capability to do that. That's why, in the line we talk about gusher, I'd find that out on my gusher, like the thing that is the most profitable that I do with unconscious competence. I don't have to think about it. I just show up and do it, and I'm great at it. I'd want to know the pricing on that. You know, when we started offering an immersion at $120,000 quite frankly, I was like, I don't think people are gonna do that. And guess what they did. And so it just, you know, we were using what we would call bracketing and pricing, where we have a low end, a high end and the middle. And I got surprised quite I was very surprised at the interest and what came on that other side. It was so what it told me was there are, or there is a market for that high level of engagement when I was just like, Oh, I'm bracketing pricing because some marketer thought that was a good idea. It was actually so I'll tell I'll I'll give them credit. It works, but you know, it's that's from a profitability standpoint. Start a little outside your comfort zone on your pricing on the high end, and let the market give you the feedback, so that you have a real feel for what it is and what could be changed, or if it's sometimes it's a misconception of what you do, the value provided all those things, but the first step is price higher than you feel comfortable.

Jason Croft  9:21  
Yeah, yeah. And there's something aspirational to when you do that, you work to that, even if you're a little uncomfortable, whew, I don't, I don't know. I don't know if I would buy at that point, you know. But I, you know, I know I can deliver, and I have delivered. So let's go there. You work a little harder. You you have the resources to you know what? Let's bring in this help that I I couldn't afford it if I'm trying to play the bottom of the barrel game, and that's in the best interest of your. Client who pays that higher price, and I think that's where we need to stay in all of this. And it's not just about can I get more. It's about can I deliver more on the road to creating more for me and my client.

Joe Blackburn  10:16  
Your value will determine it. I mean, so if you have a premium pricing, you better deliver. I mean, that's, again, that goes back to hygiene. If you're, if you're so good, call out. Because I may assume people think this, you can't price it high for the sake of pricing high and deliver shit that doesn't work, that gives you bad brain. I mean, so if you're going to do that, you have to fulfill that's called hygiene, that's a well, I should hope so, because this was this much, I would just assume that's going to happen because it's premium on my pricing. Now, you may have other offerings, and that's the other end of that spectrum, by the way. Where I think people drop the ball is they don't differentiate between them, and people end up, you know, down selling, and then people are really pissed off, because I would bet your market. What do you mean? Well, I would bet your marketing and your your results aren't always reflective of your lowest common denominator offering. It's like, if I would expect premium experience for, you know, basement pricing, that's a problem.

Jason Croft  11:19  
Well, again, that goes back to know the game that you're playing. Yeah, right. If you're playing mass market, I need, I want millions. You can play that low price game depending on what you're selling, and know that this is where people's heads are with what you're selling at this price point, and be aware of that for most of us, I think, listening who you're working with, we're looking at that other end of the spectrum. We don't need millions, you know, we need 10 this month. Who get it and see the value in what we're doing, and we can deliver amazing value for them. So we can play at that higher level. And we should both in, again, what we can deliver and the resources we have available to that client then. But also, there is a perception, the higher you go up that you absolutely like, if somebody gives you, if you're expecting to pay 10 grand for something, and they're like, Hey, it's 250 bucks, you're just like, All right, I'll see you later. We

Joe Blackburn  12:32  
call BS. But I think there was a time when that knowledge wasn't as readily accessible, and it poured in. And now every you know, with chat, GPT and AI. So if I'm on the premium side, there has to be something within the results, in the experience that would justify the premium. You know, if you're working through gusher, you have to find where yours is. Where can I deliver the most value, that's the like. So here's where I'm pricing. Where can I deliver the most value? Then you can go to those other things at some point. But from if you're looking at pure profitability, err on the side of pricing high. And let the market tell you you have to do here's a novel idea. You have to do some work and get some feedback.

Jason Croft  13:22  
Yeah, have those conversations over and over and over again. And there's

Joe Blackburn  13:25  
fast I mean, you can get information, you can get competitive. I mean, you can fast forward it a little, but it also comes in your delivery and fulfillment, so, and that takes time. So think of when you're trying to get profitable in the business, what's the most value I can provide. And where is it that when I look at this or see it, it makes me a little uncomfortable, like, I'm gonna get pushed back here, you know, it'll create some self doubt, and that's probably not a terrible thing at the beginning to figure like, Okay, I wanna get it's called getting outta your comfort zone. Some people try this, like, get out of your comfort zone a little bit, and then you hit that. What you did was you said, well, then you got to deliver that. Yes, it makes me better, and my client results better when I do that. It's not all for me. I have to deliver now, like, it's called performance leverage. Now I, you know, when it's by my, you know, I default to online world, but there's all kinds of business. Buy this thing and put in the client's hand. Now it's on the client, and they just whatever well, and this part of profitability we have to fulfill. They need to get results. And I want a lifetime client like LTV, you know. So on the premium side, LTV is way more important than volume.

Jason Croft  14:45  
Oh, yeah, plus referral, plus, yeah. So,

Joe Blackburn  14:50  
as you said, know the game you're in that's, that's a great like, hey, what game Am I trying to play here? You know, I don't play checkers on a Monopoly board.

Jason Croft  14:59  
It's good. I think it's. A good primer for folks in that aspect. You know, whether starting out, or whether just trying to build that first Guster, or they're looking around, why aren't we more profitable? Go back, feel free to re look at all this pricing. What, why they're there in the first place at that price point

Joe Blackburn  15:21  
well. And a lot of people go off gut and go, love, yeah, kind of go off there. So do some research and go high try just test me. Test me. This is a new paradigm for you. Test me on it. Just do some market research. Get it. You know, see who's bought some higher end things in your and go up see what happens. Let us know, for the four people, SDK, you don't count, because I already know like you. You know the the other three people that don't love us as much, possibly Gary, no excuse it. I had to get shout out to SDK, because I love her. That's right, yeah. Okay, all

Jason Croft  16:01  
right, lions, there's your edge. You've just experienced the lion's edge. If this episode lit a fire, if you're ready to push past your current ceiling, there's more waiting for you. Want to see what it takes to become a member of the Lion, visit jointhelion.com to discover how successful entrepreneurs become unstoppable forces and make sure you never miss an episode by hitting subscribe wherever you get your podcasts. This isn't just content. This is your edge.

Speaker 1  16:39  
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